Australian Court Finds PayPal Unit Utilized Unfair Clause in Small Business Contracts

Australia’s federal court recently ruled that PayPal’s local unit had unfair terms in its standard contracts with small business customers, according to the Australian Securities & Investments Commission (ASIC). The court found that customers who did not report billing errors to PayPal within 60 days were forced to accept the fees as accurate. ASIC had brought legal action against PayPal in September over this issue.

ASIC Deputy Chair Sarah Court emphasized that unfair contract terms in standard form contracts with small businesses will not be tolerated. The court’s decision serves as a reminder to all businesses to ensure fairness in their contracts, and ASIC will take action to protect consumers and small businesses.

PayPal cooperated with ASIC during their investigation and voluntarily agreed to remove the unfair term from their contracts on November 8, 2023. The court also ordered PayPal to pay ASIC’s litigation costs as part of the resolution. PayPal has agreed to the declarations and has removed the disputed term from their contracts.

PayPal has not yet responded to requests for comment on the court’s ruling. The outcome of this case highlights the importance of fair contract terms and the consequences for businesses that do not adhere to fair practices when dealing with small businesses.